THE MEDIA BUSINESS

THE MEDIA BUSINESS; President of Polygram Film Unit Said to Be Leading Buyout Effort

Published: May 26, 1998

LONDON, May 25—
Michael Kuhn, the president of the film unit at Polygram N.V., has expressed an interest in staging a management buyout of that unit for more than $:1-billion ($1.63 billion), The Sunday Times of London reported.

On Thursday, the Seagram Company, accelerating its shift from a beverage and spirits giant into an entertainment powerhouse, said that it would acquire Polygram, one of the world's largest music companies, for $10.6 billion in cash and stock. Seagram agreed to look into selling the film division, Polygram Filmed Entertainment, to a third party rather than fold it into Universal, its existing film studio.

To acquire Polygram, Seagram said it planned to make a tender offer for all of that company's issued shares, including the 75 percent of the company owned by Royal Philips Electronics of the Netherlands.

Potential buyers of the film operation are said to include Canal Plus S.A., the French film and television company, as well as Kirch Group, its German rival. People close to the discussions cautioned that any expectations about a sale were premature.

Goldman, Sachs & Company has already started working on the sale of the film operation, people close to the negotiations said.

In a staff memo, Mr. Kuhn said: ''My intention is to translate this opportunity into a good deal for Seagram and Philips. And for us at P.F.E., a new future in which we will all be stakeholder.''

He also wrote that ''of course, Seagram will have final say.'' He added that he hoped to complete such a deal by the end of 1998, according to the newspaper.

Mr. Kuhn will sit on a divestiture committee with representatives from Philips and Seagram. Goldman, Sachs will act on behalf of the committee, while Societe Generale Bannon will represent Polygram.

A senior executive at the film division, based in Britain, told the newspaper that the buyout was ''a very real possibility.''